Colerain Corporation is a merchandising company that is preparing a profit plan for the third quarter of the calendar year. The company's balance sheet as of June 30 is shown below:
Colerain Corporation
Balance Sheet
June 30 |
| Assets |
|
| Cash |
$ 87,000 |
| Accounts receivable |
122,000 |
| Inventory |
67,200 |
| Plant and equipment, net of depreciation |
220,000 |
|
|
| Total assets |
$ 496,200 |
|
|
| Liabilities and Stockholders' Equity |
|
| Accounts payable |
$ 61,000 |
| Common stock |
370,000 |
| Retained earnings |
65,200 |
|
|
| Total liabilities and stockholders' equity |
$ 496,200 |
|
|
|
| Colerain's managers have made the following additional assumptions and estimates: |
| 1. |
Estimated sales for July, August, September, and October will be $240,000, $260,000, $250,000, and $270,000, respectively.
|
| 2. |
All sales are on credit and all credit sales are collected. Each month's credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
|
| 3. |
Each month's ending inventory must equal 40% of the cost of next month's sales. The cost of goods sold is 70% of sales. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
|
| 4. |
Monthly selling and administrative expenses are always $55,000. Each month $4,000 of this total amount is depreciation expense and the remaining $51,000 relates to expenses that are paid in the month they are incurred.
|
| 5. |
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
|
| 1. |
Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30th. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
|
|
Schedule of Expected Cash Collections |
|
|
July |
August |
September |
Quarter |
| From accounts receivable |
$ |
$ |
$ |
$ |
| From July sales |
|
|
|
|
| From August sales |
|
|
|
|
| From September sales |
|
|
|
|
|
|
|
|
|
| Total cash collections |
$ |
$ |
$ |
$ |
|
|
|
|
|
|
| 2a. |
Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30th. (Input all amounts as positive values. Omit the "$" sign in your response.)
|
| Merchandise Purchases Budget |
|
July |
August |
September |
Total |
| Budgeted cost of goods sold |
$ |
$ |
$ |
$ |
| (Click to select)Add:Deduct: (Click to select)Beginning inventoryEnding inventory |
|
|
|
|
|
|
|
|
|
| Total needs |
|
|
|
|
| (Click to select)Add:Deduct: (Click to select)Beginning inventoryEnding inventory |
|
|
|
|
|
|
|
|
|
| Required purchases |
$ |
$ |
$ |
$ |
|
|
|
|
|
|
| 2b. |
Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30th. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
|
| Schedule of Expected Cash Disbursements-Merchandise Purchases |
|
July |
August |
September |
Total |
| From accounts payable |
$ |
$ |
$ |
$ |
| For July purchases |
|
|
|
|
| For August purchases |
|
|
|
|
| For September purchases |
|
|
|
|
|
|
|
|
|
| Total cash disbursements |
$ |
$ |
$ |
$ |
|
|
|
|
|
|
| 3. |
Prepare an income statement for the quarter ended September 30th. (Input all amounts as positive values except losses which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
|
Colerain Corporation
Income Statement
For the Quarter Ended September 30 |
| (Click to select)Interest expenseCost of goods soldSalesNet income (loss)Gross marginSelling and administrative expensesNet operating income (loss) |
$ |
| (Click to select)Gross marginNet operating income (loss)Selling and administrative expensesInterest expenseNet income (loss)Cost of goods soldSales |
|
|
|
| (Click to select)Interest expenseNet operating income (loss)Gross marginCost of goods soldSelling and administrative expensesSalesNet income (loss) |
|
| (Click to select)Cost of goods soldNet operating income (loss)Selling and administrative expensesInterest expenseNet income (loss)SalesGross margin |
|
|
|
| (Click to select)Selling and administrative expensesNet operating income (loss)Gross marginNet income (loss)Cost of goods soldSalesInterest expense |
|
| (Click to select)Net income (loss)SalesGross marginSelling and administrative expensesNet operating income (loss)Cost of goods soldInterest expense |
|
|
|
| (Click to select)Gross marginCost of goods soldSalesInterest expenseSelling and administrative expensesNet operating income (loss)Net income (loss) |
$ |
|
|
|
| 4. |
Prepare a balance sheet as of September 30th. (Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.)
|
Colerain Corporation
Balance Sheet
September 30 |
| Assets |
|
| (Click to select)Retained earningsCashNotes payableAccounts payableCapital stock |
$ |
| (Click to select)Retained earningsNotes payableAccounts receivableAccounts payableCapital stock |
|
| (Click to select)Capital stockAccounts payableInventoryPlant and equipment, netRetained earnings |
|
| (Click to select)Accounts payableInventoryRetained earningsCapital stockPlant and equipment, net |
|
|
|
| Total assets |
$ |
|
|
| Liabilities and Stockholders' Equity |
|
| |
|
| (Click to select)CashInventoryNotes receivableAccounts payableAccounts receivable |
$ |
| (Click to select)Capital stockInventoryPlant and equipment, netAccounts receivableCash |
|
| (Click to select)Accounts receivableRetained earningsPlant and equipment, netInventoryCash |
|
|
|
| Total liabilities and stockholders' equity |
$ |
|
|
|